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Question: 9 let us relax the assumption that l is constant...

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9. Let us relax the assumption that L is constant and use the general monetary model Additionally, bank deposits in Japan pay 3% interest. What is nominal interest rate paid on Korean deposits! (a) 2% (b) 5% (c) 8% (d) 12% 10. Let us relax the assumption that L is constant and use the general monetary model Additionally, bank deposits in Japan pay 3% interest and bank deposits in Korea pay 8%. In which country are investors more likely to deposit their money? (a) Investors are indifferent given that the real rate paid on deposits is 2% in both (b) Investors are more likely to deposit their money in Korea because they offer an 8% countries nominal rate (c) Investors are more likely to deposit their money in Japan because the real rate in Japan is higher than in Korea. (d) Investors are more likely to deposit their money in Korea because the real rate in Korea of 8% is higher than in Japan

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